Online prices fall for the first time in two years

Online shoppers have finally noticed that the prices of some products have fallen, and the burning of the U.S. economy has burned. Inflation is good.

Online prices began to ease in July — the first drop in two years — down 1% from a year ago, new data from Adobe Analytics shows. The biggest drop was in electronics, apparel and toys, but prices for jewelery, books, computers and sporting goods also fell. 

"Overall online inflation is declining as prices in key online categories such as electronics and apparel are starting to fall," said Vivek Pandya, manager of Adobe Digital Insights. ..

Prices for electronic devices such as TVs, smartphones, tablets and cameras are the largest online spending category, falling at an annual rate of 9.3% according to {18. doing. } Adobe Digital Price Index 

Inflation in other online categories is still hot. Food prices in July rose a record high of 13.4% from a year ago, the highest in any category. The cost of online pet products has increased by 12.6%. This is partly due to the widespread ownership of pets during the pandemic and the increased demand for related products. 

Reasons for falling prices

Softening consumer demand and strong inventories help lower prices for discretionary items such as electronics and clothing I am.

"On the other hand, [online retailers] have accumulated excess stock due to the decline in demand levels seen in the past few years such as 2020 and 2021, and there is a surplus in all of them. There was a category. "  

Essentials such as food and gas are also currently consuming a larger proportion of households, and reserve income for other products is low. 

"Consumers had to deal with a fairly significant price increase entirely in 2022, so demand is declining," Pandia added. "Retailers are looking at surpluses as consumers spending more on discretionary items are beginning to be more constrained." 

Americans spend more time outside their homes, Being free to exercise outdoors or in the gym reduces the cost of other products such as sporting goods. 

"This is the category where people were buying a lot of sporting goods and equipment when they were blocked. Today, consumers don't need it for a while. It's also a discretionary category that can be, or it's holding back growth until prices fall further. " 

Overall, online spending in July fell from $ 74.1 billion last month to $ 73.7 billion due to more people returning to physical stores.

Turn the corner.

Falling online prices offer hope that a broader measure of inflation has peaked. On Wednesday, the Ministry of Labor will release the latest Consumer Price Index, which measures the cost of a wide basket of commodities. Inflation set a new record in 40 years in June, with consumer prices ofsoaring 9.1%in the last 12 months.

Airfares and gasoline prices, which contributed to high inflation last month, fell in July, said David Kelley, chief global strategist at JP Morgan Fund.

"Purchasing manager reports of falling grocery prices, a slight drop in used car wholesale prices, and slowing payment price growth" show that July's monthly inflation rate was the lowest in more than a year. He said on Monday, suggesting that it could be. Research notes.

Gas prices have fallen for two months, rising from an average of $ 5 per gallon in early June to just over $ 4 today. Goldman Sachs Chief Economist Jan Hatzius said in a report that falling gas prices should reduce headline inflation by 1 percentage point next year.

He also states that the rampant supply chain obstacles that caused product shortages early in the pandemic are beginning to resolve, leading to better delivery times for producers and slower inflation. ..

A newsurvey by the Federal Reserve Bank of New Yorkfound that Americans in July were more optimistic that inflation could loosen their grip on the economy. Suggests. "Expectations for year-on-year increases in gas and food prices have plummeted," the bank said. 

Such expectations are very important if consumers and businesses believe that prices are likely to continue to rise, as they can drive inflation.